On Our Radar

On Our Radar

AT&T's Profit Rises as Customers Bundle Services -- Update

AT&T Inc. kept losing phone and TV subscribers in its core U.S. market but enjoyed a more profitable second quarter, thanks to customers with bundled services.

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"Our competitors tried just about every promotion in the marketing book, " finance chief John Stephens said on a conference call with analysts, citing discounts from rivals that have pressured industry revenues and profits.

For many consumers, the cost of cellular services is plunging this year after AT&T and Verizon Communications Inc. brought back unlimited data plans. Sprint Corp. last month launched an offer that promised a year of free wireless service.

AT&T countered those deals with bundle offers designed to keep customers satisfied with savings from combined phone, TV and internet service. The company lost another 199,000 video customers in the U.S., though its new DirecTV Now streaming service gained 152,000 subscribers to end the quarter with 491,000 accounts.

Mr. Stephens said "the vast majority" of DirecTV Now customers were bundling the online TV service with wireless service.

AT&T is counting on bundled-service offers to stanch customer losses that have sapped its top line for two years. The company, already the biggest pay-television operator in the U.S. since it acquired satellite provider DirecTV, is now looking to add Time Warner Inc. to the fold, which would give the Dallas company high-profile media brands including CNN, HBO and the Warner Bros. film and TV studio.

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The company is still waiting for government authorities to approve the deal, worth $85 billion when it was announced last year. Executives offered few details Tuesday about the review's progress but said they still expect it to close by the end of this year.

The No. 2 wireless company still posted a net loss of 89,000 postpaid phone subscribers, the type of customers who tend to be more profitable. The company ended the quarter with 136.5 million U.S. wireless subscribers.

The results followed last week's quarterly report from T-Mobile US Inc., which showed the No. 3 domestic carrier had added 786,000 postpaid phone subscribers in the latest period. The No. 1 U.S. carrier by subscribers, Verizon Communications Inc., will report its results on Thursday.